Turn all off. Everything. The whole lot. Pull the mains plugs.
Change your connections. Go direct from PS4 to the TV.
Switch on TV, then then the PS4. Make sure the correct HDMI input is selected on the TV. Tell me if you get no image.
Assuming you get an image on the TV from the console, next, go to the PS4 audio setup menus and check that it's putting out PCM Stereo only. This is the common plays-on-anything digital audio standard. Your telly will work with that. It may also work with DD5.1, but lets stick to the basics.
See if you get picture and sound on the TV. If you do then move on to the next step, which is adding the de-embedder box. You must switch all off again; everything in standby or not yet powered on.
Add the de-embedder, switch the audio selector to PASS, then power up and check for sound on the TV.
If good, power all down. Flick the switch to 2CH and hook up the Optical to the audio system. At this stage I'm not sure if the TV will lose sound or it gets sound along with the stereo system. I haven't seen the instructions. But you're now checking you get picture on the TV and sound on the surround kit.
Finally. all in to standby again, then switch over to 5.1, power up, and then set the PS4 to give DD5.1
I know this is a lot of powering on and powering off, but it's just to establish a known set of steps so that all the gear is talking the right language. One you get in to the routine you'll power all off, make the hardware and physic switch changes in one hit, then power on and just set the PS4 audio to whatever is needed for either the TV alone or the surround kit.